Bloomberg BNA's Daily Tax Report quoted Elan P. Keller regarding the need for multinationals to adapt their tax planning strategies in order to prepare for the implementation of an automatic tax information exchange standard. To view a PDF of the full article, please click here.

Excerpt taken from the article. Reproduced with permission from Daily Tax Report, 226 DTR I-3, 11/22/13. Copyright [1] 2013 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.

Taxpayers already need to be much more holistic in the way they view a transaction, to look at the global environment, Elan Keller of Caplin & Drysdale said.

‘‘Until recently a U.S. multinational taxpayer would think about their tax-planning in a segmented, provincial way, about how it would affect the U.S. audit, then the French audit, and so on, and a heavy focus was on the U.S. consequences,'' he said.

Now, he said, ‘‘the multinational will need to focus, almost equally, on how the other jurisdictions are going to look at this and whether they are going to get access to information'' from the U.S. Internal Revenue Service or other revenue authorities.

They will in particular need to be able to demonstrate a business purpose for a transaction, in each jurisdiction, said Keller.

He noted that the U.S. and France signed an intergovernmental agreement Nov. 14 to implement the Foreign Account Tax Compliance Act as part of an international push against tax evasion, in particular through the automatic exchange of tax information (221 DTR I-2, 11/15/13).

Keller's comments come as approximately 200 tax officials are meeting for the Global Forum on Transparency and Exchange of Information for Tax Purposes in Jakarta Nov. 21-22.

The work on establishing global automatic information exchange is an expansion of the Joint International Tax Shelter Information Centre, or JITSIC, creating a very broad web of both formal and informal understandings and agreements among revenue authorities for working together, Keller said.

‘‘Transactions that are tax motivated are going to be scrutinized globally much more than in the past. The bottom line is that for a corporation's transactions to pass muster in audit, they will have to have a legitimate business purpose for entering into that transaction,'' he said.

Information exchange mechanisms under FATCA and the G-20's global information exchange mechanism may take time to complete, but ‘‘countries are already corresponding, and that affects taxpayers immediately,'' he said.